Some Louisiana Citizens Customers

Article

A last-minute provision added to legislation headed to the governor’s desk in early June delivered a price cut to south Louisiana property owners who get insurance through the state-run insurer of last resort.

Lawmakers are seeking to soften the blow of hefty rate increases for customers of the Louisiana Citizens Property Insurance Corp. People with wind policies in Louisiana are facing steep rate hikes. The average boost for wind-only policies is 58 percent, but customers in some coastal parishes will see increases reaching 170 percent and more than 200 percent.

As sent to Gov. Bobby Jindal, Senate Bill 204 would lessen insurance costs by 10 percent for Citizens customers in 12 parishes across south Louisiana. Citizens is supposed to charge rates that are 10 percent higher than the private insurers in an area. The new proposal would scrap that requirement until August 2015 for the coastal parishes.

“For those 12 parishes, everything else stays the same. We just don’t add the 10 percent to whatever their annual adjustments in rates are,” said Insurance Commissioner Jim Donelon.

The parishes affected are Calcasieu, Cameron, Vermilion, Iberia, St. Tammany, Orleans, Jefferson, St. Bernard, Plaquemines, St. Mary, Terrebonne and Lafourche.

Donelon said he didn’t support the provision but would not ask Jindal to veto it. He said lawmakers assured him they weren’t interested in making Citizens a more enticing insurance company. Donelon doesn’t want Citizens, which has 107,000 policyholders, to grow larger or to compete with the private market.

Treasurer John Kennedy, whose office has a seat on the board for Citizens, said the wind and hail policy increases will mean policyholders in Terrebonne Parish who pay $1,600 for coverage for a $100,000 home on average will now pay $2,500 for that coverage. Kennedy claims the wind policy rate hike is illegal. He said the law calls for a 12 percent average increase. Donelon and the Citizens board disagreed.

“Right now, Citizens is the insurer of last resort,” Kennedy said. “With these kind of rate increases for them, we’re going to become the insurer of no resort.”